Sir, you’ll need to prove to me that you’re dead

The following is a guest post by Dave Chamberlain. Dave has over 30 years of experience in all aspects of software including marketing, business development and creating and fostering business partnerships. He lives in Philadelphia, Pennsylvania.

Life Insurance is a complex and highly regulated business. The basic premise is simple: You pay in while alive, and it pays back when you’re not. In reality it’s much, much more complex.

Behind the scenes, it is a bewildering array of products with different rules, regulations and oversight in each American state and each country worldwide.

The major problem faced by all life insurance carriers is knowing with absolute certainty and speed when a policy holder is no longer with us. It is hard to know that some one isn’t alive?

On the surface this sounds like a straightforward problem to solve, however, complexity comes from the following:

Missed opportunities

Most carriers built (or acquired) numerous policy management systems over the years. I recently spoke to one who has 14 different systems in one business line alone, making it very tough to get a complete understanding of the relationship with a customer.

Not knowing your customer in any industry results in misaligned sales and missed cross-sell and up-sell opportunities. Topping this off, fraud is made easier by complexity. A typical fraud involves using the information of a recently deceased person to start a new policy that is immediately eligible for pay out.

Many sources of data

Compounding the system issues, spouses and other family aren’t the only source of notification. In the US, for instance, data is received from the Social Security Administration, Veterans Administration, each state, Lexus-Nexus and so on. Carriers are now looking at social media (such as obituaries.com for instance) to provide confirmation. Of course each source has different attributes and variations of identity data. These differences make it next to impossible to programmatically tell they describe the same person.

Risk mitigation

The processes around pay out are complex and vary by business line, policy and individual. Processes tend to be poorly understood and documented, inconsistently applied and labor intensive. As you can imagine, various government agencies expect better and mistakes lead to regulatory correction and large penalties.

So how to solve the problem?

• Find a better way to document and enforce complex business processes
• Integrate the multiple legacy systems with a common information backbone
• Pattern match to simplify and align data despite errors and differences

The problems faced by life insurance are no different than what is faced by most businesses today, and the same solutions apply to a broad swath of industry. Looking ahead, we’ll be covering similar problems in other industries.

Google+

Christopher Taylor